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Innovative Industrial Properties Inc (NYSE:IIPR) To Buy Arizona Property

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Innovative Industrial Properties Inc

Innovative Industrial Properties Inc (NYSE:IIPR) has executed a deal to buy a property in Arizona constituting more than 350,000 square feet of industrial and greenhouse space in a sale-leaseback deal with a subsidiary unit of The Pharm, LLC. Concurrent with the completion of the deal, the firm anticipates to finalize a long-term, triple-net lease deal with The Pharm subsidiary unit, which plans to use the facility for medicinal cannabis grow activities.

The details

The Pharm is directed by a senior management team that has years of collective experience and a strong track record in the medical use cannabis, food and beverage, agriculture, e-commerce and finance industries. Innovative Industrial reported that the deal price for the asset is $15 million. The Pharm subsidiary unit, as tenant, is also projected to perform certain tenant changes at the property post the closing of the deal, for which the firm has agreed to offer compensation of up to $3 million. Considering full compensation of the tenant improvement allowance, the firm’s total investment in this asset will amount to $18 million.

The preliminary term of the lease is fifteen years, with two alternatives to extend the term for another two five-year periods. This lease offers for a preliminary annualized total base rent of $2.52 million or 14% of the amount of the deal price and the tenant improvements, subject to a preliminary partial rent reduction. The aggregate base rent is open to 3.25% annual jump during the lease term, while the Pharm unit is also responsible for compensating the firm a property management payment equal to 1.5% of the then-prevailing base rent.

The deal is projected to complete in the fourth quarter 2017. As per the update from Innovative Industrial Properties, the deal is subject to the firm’s continued diligence and usual closing conditions. The firm cannot offer assurances that it will conclude on the deal on the terms mentioned herein, or at all.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of MMJReporter.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure

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